SCT Technologies Pte Ltd v Western Copper Co Ltd

• Jurisdiction: Singapore
• Judge: Aedit Abdullah JC
• Judgment Date: 21 May 2015
• Neutral Citation: [2015] SGHC 135
• Court: High Court (Singapore)
• Docket Number: Suit No 751 of 2013
• Published date: 08 January 2016
• Year: 2015
• Hearing Date: 27 January 2015,18 March 2015,28 January 2015,29 January 2015
• Plaintiff Counsel: Kelvin Lee Ming Hui (WNLEX LLC)
• Defendant Counsel: Ng Hweelon (Veritas Law Corporation)
• Subject Matter: Evidence,Proof of evidence,Onus of proof
• Citation: [2015] SGHC 135

Aedit Abdullah JC: Introduction

In this matter, the parties ran their respective cases, as they were entitled to do, on the basis that the onus of proof of certain facts lay on the other party. Thus, parties took the position that the consequences of any omission to produce relevant evidence fell on the other side. In the face of such a position by the parties, especially since these parties were both commercial entities and represented by counsel, the court had to determine the case on the evidence before it, and decide on the just outcome in the light of such evidence. While a fuller inquiry would have perhaps uncovered more than what was deposed and testified, the court had to bear in mind the adversarial nature of these proceedings and let the parties play their cards as they did. I found for the defendant; the plaintiff has now appealed.

Background

The plaintiff, SCT Technologies Pte Ltd (“the Plaintiff”), claimed from the defendant, Western Copper Co Ltd (“the Defendant”), payment of US$1,274,741.73 for goods, namely copper balls (which were apparently balls of copper or compounds containing copper, to be used ultimately in manufacturing), sold to the Defendant in 2007 and 2008. The Defendant responded that the sum had in fact been paid. The Plaintiff’s claim was founded on three invoices: I 27678, dated 14 November 2007, for US$336,200.83 I 27712, dated 20 November 2007, for $646,212.06 I 28172, dated 30 January 2008, for US$614,671.57 After crediting for some part payments which were not in dispute, the outstanding amount the Plaintiff claimed was owing was US$1,274,741.73,

The Plaintiff was a subsidiary of company, Advance SCT Ltd (“Advance SCT”), in 2007 and 2008. The Plaintiff and the Defendant were also related companies, but the latter was not technically a subsidiary of Advance SCT as Advance SCT did not hold more than 50% of the Defendant’s shares.

The invoices arose out of orders made by customers of the Defendant. For reasons that were disputed between the parties, orders to the Defendant were sent on to the Plaintiff, which then arranged for the shipment of goods, generally copper in the form of balls, to these customers. However, payment was not made directly by the customers to the Plaintiff. Instead, the customers would pay the Defendant who would then in turn pay the Plaintiff.

The Plaintiff contended that the payments made by the Defendant were for the benefit of Seah Metal Industries Pte Ltd (“Seah Metal”), another subsidiary of Advance SCT, specifically for copper balls sold and delivered to the Defendant’s customers. The Defendant’s payments thus did not go, according to the Plaintiff, towards satisfying the amounts owing to the Plaintiff. In 2009, the Plaintiff left the Advance SCT group. Subsequently, the Plaintiff through its manager, Mdm Sim Aileen (“PW2”), had difficulties getting information from Advance SCT.

The present action was only instituted in 2013. The issues with the changes in the structure and running of the business seems to have played some role in why the proceedings were not started earlier, though other reasons were also put forward by the parties. The Plaintiff said that it was chasing for payment and trying to resolve the matter amicably, while the Defendant contended that the Plaintiff only decided to pursue the matter because the director of the Plaintiff, Mr Tea Yeok Kian Terence (“PW1”), (who is also incidentally married to PW2) had lost a case launched by the Defendant’s witness, Mr Chang Te-Lung.

The only real legal issue thrown up in this case concerns the burden of proof. The Plaintiff had to make out its claim. The Defendant, and there is no criticism of Defendant’s counsel for this, chose to put forward, as he was entitled, a minimal case, essentially requiring the Plaintiff to prove its claim, and giving little by way of evidence from its side: it only had the one witness, its general manager.

The Plaintiff’s case

The Plaintiff contended that the Defendant failed to call material witnesses, and no statement of account was produced by them. On the other hand, the Plaintiff had adduced what evidence it could. It was further argued that the payments made by the Defendant could not have related to the invoices in question. On the evidence, such payment would have been collected by the Defendant from the customers, with onward payment to the Plaintiff. The Defendant had on the evidence paid the Plaintiff before money was received from the customers.

The Plaintiff maintained that while it had the overall burden of proof, the Defendant had to show that payments were made. The case of Ma Ong Kee v Cham Poh Meng and another suit [2013] SGHC 144 (“Ma Ong Kee”), discussing Wee Yue Chew v Su Sh-Hsyu [2008] SLR(R) 212 (“Wee Yue Chew”), showed that in the present situation the Defendant bore the burden of proving discharge of payment. Even if this was incorrect, the Plaintiff had made out a prima facie case that payment had not been made, so the evidential burden had shifted to the Defendant, and remained undischarged.

The Defendant’s case

The Defendant’s case was that there was insufficient evidence to support the Plaintiff’s allegations. The Plaintiff’s witnesses did not help. PW1 did not sufficiently know the operations of the company to give useful evidence. The audited reports were based on incomplete information, as noted in those produced by Ernst & Young LLP, which gave qualified reports. Even the subsequent auditor retained for the accounts for subsequent years, Mr Low Aik Har (“PW3”), had to qualify the accounts because of the issues with the records earlier. The Plaintiff’s main evidence thus came from PW2, who relied on batch listings of the accounts owing. That, the Defendant argued, was not sufficient to establish the non-payment of the amounts owing on the invoices. No statements of accounts were produced or in evidence.

The Decision

I came to the conclusion that the burden was on the Plaintiff, and this was not discharged. Not all the possible evidence was brought into court. But ultimately no adverse inference could be drawn against the Defendant for any of these omissions or gaps. The Plaintiff had the burden of showing that the money received was not properly payment for the invoices in question. Part of the difficulty facing the Plaintiff was that the events took place about seven to eight years ago. There have been changes in the corporate structure of the Advance SCT group, the personnel involved in various areas, and records are not available. The respective burdens of proof thus played a significant role in the outcome.

The main issue at hand, of course, was the purpose of the payments made by the Defendant. In analysing this main issue, the following areas had to be examined: the burden of proof of the purpose of payment received; the transactions and the records; the auditors’ reports; the inferences that parties sought to be drawn; evidence not brought into court; and the assessment of whether the burden was discharged.

Burden of proof of purpose of payment received

The burden of proof was argued at some length by the Plaintiff. The Plaintiff relied on cases in which it was held that the burden of proof of discharge or repayment was on the part of the defendant: Ma Ong Kee which cited Wee Yue Chew. The latter case was considered in Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (trading as Rabobank International), Singapore Branch v Motorola Electronics Pte Ltd [2011] 2 SLR 63 (“Cooperatieve Centrale”) where the Court of Appeal noted (at [31]):

In civil trials, the pleadings are central in determining the occurrence of the burden of proof, because the pleadings state the material facts establishing the legal elements of a claim or a defence: Pinsler, Evidence and the Litigation Process (LexisNexis, 3rd Ed, 2010) at para 12.33; Phipson on Evidence (Hodge M Malek gen ed) (Sweet & Maxwell, 17th ed, 2009) ("Phipson") at para 6-06. The legal burden of proving a pleaded defence rests on the proponent of the defence, unless the defence is a bare denial of the claim: Currie v Dempsey [1967] 2 NSWR 532 at 539, followed by the Singapore High Court in Wee Yue Chew v Su Sh-Hsyu [2008] 3 SLR(R) 212 at [3]. This rule is consistent with the general principle underlying ss 103 and 105 of the Evidence Act, viz, that he who asserts must prove. As stated by Lord Maugham in Joseph Constantine Steamship Line, Limited v Imperial Smelting Corporation, Limited [1942] AC 154 ("Constantine") at 174: The burden of proof in any particular case depends on the circumstances in which the claim arises. In general the rule which applies is 'Ei qui affirmat non ei qui negat incumbit probatio'. It is an ancient rule founded on considerations of good sense and it should not be departed from without strong reasons.

We also refer to the commentary in Phipson on the above statement by Lord Maugham (at para 6-06): This rule is adopted principally because it is just that he who invokes the aid of the law should be the first to prove his case; and partly because, in the nature of things, a negative is more difficult to establish than an affirmative. The burden of proof is fixed at the beginning of a trial by the state of the pleadings, and it is settled as a question of law, remaining unchanged throughout the trial exactly where the pleadings place it, and never shifting. [emphasis in original]

The pleadings must thus be examined and considered. In doing so the court would need to look at the substance of the pleadings, to see which side bears the burden, and not the grammatical form: see Cooperatieve Centrale at [32].

In the present case, while the Plaintiff tried to bring itself within the position as stated in Wee Yue Chew (see Wee Yue Chew at [3]), there is a significant difference. The Defendant claimed to have paid money directly to the Plaintiff. The Plaintiff did not...